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2011-03-22 10:50:21
Fruit stall The CPI measure has now been one percentage point or more above
target for 15 months
The UK Consumer Prices Index (CPI) annual rate of inflation has risen to 4.4%,
up from 4% in January.
This was driven by higher food, fuel and clothing costs and was the highest
level for more than two years.
Retail Prices Index (RPI) inflation - which includes mortgage interest payments
- rose to 5.5% from 5.1% in January, the highest rate for 20 years.
The CPI measure has now been one percentage point or more above the 2% target
for 15 months.
The CPI figure is the highest since October 2008, and will put pressure on the
Bank of England to lift interest rates to curb accelerating inflation.
The main contributing factors included rising domestic heating costs, an
increase in financial services costs as well as the higher cost of books and
toys.
The largest inflationary pressures came from clothing and footwear costs which
rose by 3.6% following the January sales, compared with a rise of 2% in the
same period a year ago.
The overall increase in CPI to 4.4% was more than had been forecast by
economists.
"Inflation has jumped to its highest since October 2008, putting the Bank of
England under even greater pressure to demonstrate its commitment to hitting
its inflation target by hiking interest rates," said analyst Hetal Mehta of
Daiwa Capital Markets.
"And this pressure will no doubt intensify as higher commodity prices feed
through in the coming months, taking inflation to around 5%.
"Provided that interest rates start to increase by 25 basis points [0.25%] per
quarter from August, in line with our expectations, then we believe inflation
will average 2% next year," she added.